Parth Patel wanted to own all of the historic 16-floor Medical Arts Building in downtown Hot Springs and turn it into a hotel when his company bought the dilapidated property in 2021.
But there was a sole holdout. Melanie Chambers of Fayetteville, owner of the building’s 659-SF penthouse, refused to sell.
She has steadfastly rejected offers, and now she is accusing Patel’s Medical Arts Tower Horizontal Property Regime of trying to take it by force.
Patel’s entity sued Chambers in August, claiming that she owes nearly $46,000 in assessment fees for work done on the building, along with interest.
The complaint seeks a judgment against Chambers, who is a real estate agent in Fayetteville. If she doesn’t pay, the regime wants to foreclose on her penthouse.
Chambers, in a counterclaim, asserts that Patel’s regime lacks authority to assess her property. Further, she says the regime’s “special assessment” is simply “an attempt to force Ms. Chambers” to give up the penthouse.
She filed the counterclaim last month in Garland County Circuit Court.
Chambers wants the court to appoint a receiver to manage the building, which was abandoned in the 1980s. In 2012, Preserve Arkansas placed the building on its list of Arkansas’ Most Endangered Places.
Meanwhile, Patel filed a building permit with the Hot Springs Planning & Development Department on Sept. 11. He’s looking to completely renovate the property.
The work is valued at $3.5 million, but the city still needs approved mechanical, electrical and plumbing designs before it can grant a permit.
Neither Patel nor his attorney, Philip Montgomery of the Legacy Law Group of Hot Springs, returned calls for comment. In court filings, Patel’s entity denied Chambers’ allegations.
But preservationists are happy to discuss the building. Built in the art deco style in 1929, the Medical Arts Building is “one of the more prominent buildings in downtown Hot Springs,” Preserve Arkansas Executive Director Rachel Patton said.
After Patel’s Trilochan LLC bought most of the building for $1.18 million more than three years ago, Patel told Arkansas Business that plans called for developing it into a hotel “with more of an upscale feel to it.” He spoke of talks with Marriott International to turn it into an Aloft brand hotel.
“We felt that there was a need for more hotel rooms in the downtown area,” Patel said. “Pre-pandemic, in 2019, Hot Springs National Park got roughly about 8 million visitors. So it’s a very premier destination for our state and then for the South.”
Patton said that there are “several big projects that are yet to be done downtown, and that’s one of them.”
‘Skyscraper of Health’
Chambers bought her unit in the Medical Arts Building for $500 from Arkansas’ commissioner of state lands as a tax delinquent parcel in 2013, according to court filings in the case.
At the time, the building had been vacant above the first floor since 1986, according to the Preserve Arkansas website. And parts of the building had been vandalized.
But the building was attractive to Patel and his father, Dr. Vijay Patel.
Vijay Patel had entered the hospitality business in 1980 when he bought an 18-room motel in Orlando, Florida, according to VIPA Hospitality Management’s website. He is the founder of VIPA.
Since then, Patel’s VIPA Hospitality Management has continued to grow, and in the mid-1990s, it bought and began operating hotels in Hot Springs.
Parth Patel moved to Hot Springs in 2005 to manage his father’s hotel investments.
VIPA’s website lists 12 hotels that it owns, including seven in Hot Springs.
But it was the Medical Arts Building that Parth Patel wanted. “Since 2007, we’ve been actively looking at doing a project in downtown Hot Springs as we felt that there was a great need for hotel rooms in downtown,” he told Arkansas Business in 2021. “And, as far as the Medical Arts Building, we honestly have been looking at this building for roughly about five years.”
The Medical Arts Building was placed on the National Register of Historic Places in 1979. It held medical offices and was known as the “Skyscraper of Health,” when it was operational. The deal to buy the building closed in 2021. The sellers were Maff LLC, led by C. Anthony Taylor; MA Building Hot Springs LLC, led by Clay Coffman; and MM 15th Floor Medical Arts LLC, led by Monica McKinney.
Patel also wanted Chambers’ unit, but “for below market value,” said her counterclaim, which was filed by her attorneys Matthew Finch and Samuel Piazza of Gill Ragon Owen of Little Rock.
Between October 2020 and January 2021, Chambers rejected at least three offers from SVP LLC, an entity associated with Patel, to buy her property.
Montgomery, Patel’s attorney, sent a letter to Chambers in April 2021 saying that if the building sale went through the building would undergo “extensive rehabilitation and repair” work, which would include projects in the common areas such as the elevator, stairways and roof.
“As you might imagine, these costs are anticipated to be extremely expensive” and Chambers would be “obligated” to pay 1.49% of them.
Montgomery said in the letter that failing to pay the assessments could result in a lien being placed against Chambers’ property.
But Chambers didn’t sell, and Patel “made good on the threats” in the letter and began “his effort to control all of the Building by inappropriate, unethical and actionable means,” her filing said.
Chambers said that she was locked out of the building and the unlawful assessments were placed on her.
Patel is “seeking to foreclose Ms. Chambers’ interest in the Property based upon an alleged failure to pay ‘association dues’ which have not been lawfully assessed,” her filing said.
Patel told Arkansas Business in 2021 that the preliminary plans call for a hotel with about 100 rooms.
He expected the project to create 100-150 jobs during construction. He projected he would hire about 30 people to work at the 48,000-SF hotel.
The regime said in its answer to Chambers’ allegations that the building’s owner has made “significant and necessary” repairs to the building, including “the long-ignored and damaged common elements” including an estimated $852,000 cost to repair the elevator.
“In addition, insurance on the structure has been obtained and all work must comply with current and existing building and fire codes,” the regime’s filing said.
The regime said that Chambers is required to pay her share for the projects. But she said that Patel didn’t have the right or authority under the master deed to file liens against her property. The regime accused Chambers of wanting to “reap the benefits of Trilochan LLC’s efforts without any cost to her.”
Patel told Arkansas Business in 2021 that people need to be patient, as the renovations will be challenging and complicated.
“A building like this and with the condition that it’s in — it definitely won’t happen overnight,” Patel said. “But we’ve studied the building, and we’ll definitely get it done.”
The case is pending before Garland County Circuit Court Judge Lynn Williams.
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